The new wedding season has started in North India from 23rd November 2023. Big fat Indian weddings are a small ecosystem of economic activities generating and transferring big amounts of money in the form of cash, gold and other items. Giving gifts is an important part of weddings and in India, there is no tax on gifts received by newlywed couples from their immediate family members on the occasion of their marriage.
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The gifts newlywed couples receive on the occasion of their marriage from their immediate family members are not taxable in India. Wedding gifts can be in various forms like cash, a house, property, gold, jewellery or stock, etc., all of which are exempt from taxation in India. According to Section 56 of the Income Tax Act immediate family members include parents, siblings, or siblings’ spouses. For example, if a newlywed couple gets Rupees Five lakh in their bank account as a wedding gift, it won’t be taxed.
Tax rules for wedding gifts
If the cost of gifts received by a newly-wed couple exceeds Rs.50,000 and it has not been presented by the individual listed as an immediate family member under Section 56 of the Income Tax Act then it would be taxable. In such cases, the tax will be charged to the recipient. For example, your gifts from your friends worth Rs.45,000, you will not be charged any tax but if you get another gift whose monetary value is Rs.10,000, then the total monetary value of the gifts you have received would be Rs.55,000, and this whole amount would be subject to tax based on the slab rate associated with 'income from other sources'.
In India, Income tax is not levied on gifts received on the occasion of marriage regardless of their value or form. This includes cash, stocks, jewellery, automobiles, electronics, artefacts, and immovable property such as houses or land. However, a newly married couple will have to pay stamp duty up to Rs.50,000 if they receive immovable property as a gift from unrelated individuals.
Cash received as gifts should be preferably deposited in the bank accounts around marriage dates to avoid any tax implications. If you are getting high-value gifts like houses or cars, get a gift deed made near the wedding date. It is recommended that you maintain a record of all wedding gifts, including cash, precious jewelry or gold, etc., for proper asset documentation.
When are gifts taxed?
Even though gifts are tax-exempt, any income that is generated from these gifts will be taxed. For example, if a couple earns income, from a property received as a gift, in the form of rent then that income will be subject to tax. Likewise, if they sell that property in the future, any capital gains will be taxable.
